{"id":894261,"date":"2018-05-23T16:08:30","date_gmt":"2018-05-23T22:08:30","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=894261"},"modified":"2018-05-23T16:08:30","modified_gmt":"2018-05-23T22:08:30","slug":"importance-subcontractor-exception-work-exclusion","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/importance-subcontractor-exception-work-exclusion\/","title":{"rendered":"The Importance of the Subcontractor Exception to the \u201cYour Work\u201d Exclusion"},"content":{"rendered":"<p>John J. Kozak, Esq. | <a href=\"http:\/\/floridaconstructionupdate.com\/the-importance-of-the-subcontractor-exception-to-the-your-work-exclusion\/\" target=\"_blank\" rel=\"noopener\">Florida Construction Law News<\/a> | April 24, 2018<\/p>\n<p>Commercial General Liability (CGL) policies typically include a \u201cyour work\u201d exclusion, excluding coverage for \u201c\u2019property damage\u2019 to \u2018your work\u2019 arising out of it or any part of it and included in the \u2018products-completed operations hazard.\u2019\u201d\u00a0 These CGL policies define \u201cyour work,\u201d in pertinent part, as \u201cwork or operations performed by you\u00a0<strong><u>or on your behalf<\/u><\/strong>.\u201d (emphasis added).\u00a0 As the recent case of\u00a0<u>Mid-Continent Cas. Co. v. JWN Construction, Inc.<\/u>, 2018 U.S. Dist. LEXIS 20529 (S.D. Fla. 2018) reminds us, the \u201cyour work\u201d exclusion can serve to eliminate coverage for a general contractor, even when property damage is caused by a subcontractor.<\/p>\n<p>In\u00a0<u>JWN Construction, Inc.<\/u>, a residential homeowner discovered water intrusion and related property damage and sued the general contractor, JWN, for damages.\u00a0 In the ensuing declaratory judgment action filed by JWN\u2019s CGL carrier, the carrier argued it owed no duty to defend or indemnify JWN in the underlying lawsuit under the \u201cyour work\u201d exclusion, notwithstanding the fact that the home was actually constructed by a subcontractor of JWN.\u00a0 The Court in\u00a0<u>JWN Construction, Inc.<\/u>\u00a0agreed with the carrier, granting summary judgment in the carrier\u2019s favor and specifically holding that the \u201cyour work\u201d exclusion applied to bar coverage for work performed by JWN\u2019s subcontractor.\u00a0 In so doing, the Court explained as follows:<\/p>\n<p>If work was performed by JWN or on JWN\u2019s behalf \u2013 here by a subcontractor \u2013 then the \u201cyour work\u201d exclusion applies.\u00a0 Historically, insurers could be liable under commercial general liability policies resembling the policy in question for certain types of damages caused by subcontractors, if the contract lacked specificity on this topic. Nonetheless, insurers do possess the right to define their coverage as excluding damages arising out of a subcontractor\u2019s defective work by eliminating subcontractor\u2019s exceptions from the policy.An insurer is only liable for a subcontractor\u2019s defective work when the \u201cyour work\u201d exclusion does not eliminate coverage for work performed by a subcontractor. \u00a0Here, the \u201cyour work\u201d exclusion also excludes work performed by a subcontractor.\u00a0 In conclusion, the insurance policy in this case excluded coverage for work performed not only by JWN, but also by JWN\u2019s subcontractors. . .<\/p>\n<p><u>Id<\/u>. at *11-12 (citations omitted; available upon request).<\/p>\n<p>As the Court in\u00a0<u>JWN Construction, Inc.<\/u>\u00a0suggests, the general contractor\u2019s lack of coverage could have been avoided had the CGL policy\u2019s \u201cyour work\u201d exclusion included what is known as a \u201csubcontractor exception.\u201d\u00a0 Under this exception, the \u201cyour work\u201d exclusion \u201cdoes not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.\u201d\u00a0 Without this exception in their CGL policies, general contractors may face the horrifying prospect of being sued for substantial damages related to latent defects caused by their subcontractors without any collectible CGL coverage.<\/p>\n<p>To avoid this scenario, general contractors should consult with their insurance brokers and carefully review their CGL policy to ensure the \u201cyour work\u201d exclusion includes a subcontractor exception.\u00a0 This should include a careful review of all endorsements as certain policy endorsements may eliminate the subcontractor exception by expressly excluding coverage for work performed by a subcontractor. \u00a0\u00a0If the \u201cyour work\u201d exclusion in the policy does not include a subcontractor exception, general contractors should strongly consider purchasing the additional coverage afforded by the exception so as to avoid the coverage dilemma faced by the general contractor in\u00a0<u>JWN Construction, Inc<\/u>.<\/p>\n<p>If you have any questions about this topic, please do not hesitate to reach out to a member of CSK\u2019s Construction Group.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>John J. Kozak, Esq. | Florida Construction Law News | April 24, 2018 Commercial General Liability (CGL) policies typically include a \u201cyour work\u201d exclusion, excluding coverage for \u201c\u2019property damage\u2019 to \u2018your work\u2019 arising out of it or any part of it and included in the \u2018products-completed operations hazard.\u2019\u201d\u00a0 These CGL policies define \u201cyour work,\u201d in&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/importance-subcontractor-exception-work-exclusion\/\">Continue reading <span class=\"screen-reader-text\">The Importance of the Subcontractor Exception to the \u201cYour Work\u201d Exclusion<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[30,9721],"tags":[7757,9895,4739,56],"class_list":["post-894261","post","type-post","status-publish","format-standard","hentry","category-general-liability-policy","category-property-damage","tag-your-work-exclusion","tag-advise-consult","tag-commercial-general-liability-policy","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Importance of the Subcontractor Exception to the \u201cYour Work\u201d Exclusion - Advise &amp; 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